Many business owners and CEO’s are so busy working in the business of today that they don’t have time and energy to focus on building the business of tomorrow. When working with business owners and CEO’s, Twoeyes applies the “Three Horizons of Growth” model to structure our thinking. This model provides a framework to encourage enterprise leaders to think about growing their company in a way that balances the competing demands of the present while investing for the growth opportunities of the future. The challenge is to manage business opportunities across three horizons simultaneously.
The Three Horizons of Growth
Horizon 1 – Defend and extend core businesses
Horizon 1 contains the core business activities that generate profits and cash flow today. The core business may still have some growth potential but, eventually, they will flatten out or decline. They provide the skills and resources for growth.
Innovation in Horizon 1 is about finding better ways to deliver the current business. The short term goal should be to improve operational performance, strengthen and extend the competitive position and maximize the remaining value in existing products and services.
- Are your core businesses generating enough profit to allow you in invest in growth?
- Do you have a strong performance orientation to push profits higher in the next few years?
- Is your cost structure competitive with that of the rest of your industry?
- Has your operating performance been stable?
- Has your market share grown?
- Is your company reasonably well protected from new competition, technologies, or regulations that could significantly change things?
Horizon 2 – Build emerging businesses
Horizon 2 contains new business opportunities that may or may not be generating profits in the short term. While they will need continuing investment to finance their development, they are expected to become significant profit generators over the medium term.
Innovation in Horizon 2 is about bringing new ideas to fruition. The focus here is to build emerging capabilities and fuel growth in new business opportunities that will deliver future revenue streams.
Do you have any new businesses capable of creating as much profit as the current core businesses?
Are these new businesses growing in the marketplace?
Are you willing to make substantial investments to accelerate new business growth?
Horizon 3 – Create options for future businesses
Horizon 3 is about seeding options today for the future, some of which will prove successful and contribute significant profits in the long term. Innovation is horizon 3 is about identifying and nurturing options for the future, such as research projects, pilot programs, or minority stakes in new businesses.
- Does your leadership team set aside time to think about growth opportunities and industry trends?
- Have you developed a portfolio of options for reinventing businesses and creating new ones?
- If so, are these ideas very different from those on the list last year? Three years ago? Five years ago?
- Are you developing ways to turn these ideas into new businesses?
By applying the principles of Private Equity, Venture Capital and Strategic Operational Planning, Twoeyes can help Entrepreneurs, Business Owners, Boards and CEO’s to plan and execute strategy that reduces risk, increases value and delivers bottom-line benefits to key stakeholders.